New Delhi [India], March 30–31 (ANI): Indian equity markets witnessed a sharp sell-off on Monday, with the BSE Sensex plunging 1,635.67 points, or 2.22 per cent, to close at 71,947.55. The NSE Nifty 50 also declined significantly, falling 488.20 points, or 2.14 per cent, to settle at 22,331.40. The downturn coincided with the Indian rupee weakening to near the 95 mark against the US dollar, hitting a record low and reflecting heightened risk-off sentiment across domestic markets.
Market participants attributed the decline to intensifying geopolitical tensions and rising energy prices. Siddhartha Khemka, Head of Research, Wealth Management at Motilal Oswal Financial Services Ltd, described the session as “another day of carnage” on D-Street, noting that uncertainty continues to loom over investor sentiment. He highlighted that escalating tensions in West Asia, driven by the ongoing US-Israel conflict with Iran, have entered their fifth week and expanded across the region, weighing heavily on markets.
Khemka further pointed out that macroeconomic pressures compounded the situation, with Brent crude prices surging toward USD 108 per barrel. He added that the rupee’s depreciation past the 95 mark—despite intervention by the Reserve Bank of India—and its over 4 per cent fall in March have been key contributors to the negative sentiment. Meanwhile, India’s 10-year bond yield crossed 7 per cent, its highest level in over 21 months, adding to investor concerns.
Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities, said the market structure remained fragile throughout the session. He explained that the Nifty opened with a gap down on the final trading day of FY26 and attempted an early recovery, but the rebound lacked follow-through. The index broke key intraday support levels of 22,470–22,450, marking the eighth session in the March series where it closed with losses exceeding 1 per cent.
The banking sector bore the brunt of the sell-off, with the Bank Nifty underperforming broader indices and dropping nearly 3.82 per cent to close at 50,275. Shah noted that the index extended its downtrend and fell below its previous swing low of 51,324. This decline followed the Reserve Bank of India’s move to tighten position limits on onshore rupee forex exposures, triggering volatility among financial stocks. Market breadth also remained weak, with 442 stocks in the Nifty 500 ending in the red, while foreign institutional investors continued to remain net sellers, offloading Rs 4,367 crore in the previous session.
Meanwhile, a report by the State Bank of India suggested that the recent depreciation of the rupee is broadly in line with movements in other global currencies and does not indicate excessive weakness. According to the report, the rupee’s decline since February 27—marking the start of the current West Asia conflict—reflects global uncertainty rather than domestic instability. It noted that currencies which had appreciated earlier have corrected more sharply, and the rupee has performed relatively better in comparison.
The report emphasised that India’s external position remains strong, with foreign exchange reserves exceeding USD 700 billion—sufficient to cover more than 10 months of imports—while short-term debt remains below 20 per cent of reserves. This robust buffer, it said, provides adequate protection against speculative pressures and enables effective market intervention by the Reserve Bank of India.
To manage volatility, the report recommended several policy measures, including providing oil marketing companies with a special window to handle their daily dollar demand of USD 250–300 million separately from the broader market. It also suggested that the RBI could consider conducting “Operation Twist” to better manage yield dynamics by raising short-term yields while moderating long-term rates.
Additionally, the report noted that recent RBI steps to rationalise banks’ open positions may have contributed to divergences between onshore and offshore currency markets. It stressed the importance of careful liquidity management to support the rupee amid ongoing global uncertainties.
Overall, while financial markets remain under pressure due to geopolitical tensions and rising commodity prices, the SBI report underscored that India’s strong macroeconomic fundamentals and substantial forex reserves provide a significant cushion against sustained volatility.
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